Transaction Advisory, Investment Management

September 24, 2018

The Role of Earn-outs in Asset Management M&A

Earn-outs are as common to investment management firm transactions as they are misunderstood.

Despite the relatively high level of financial sophistication among RIA buyers and sellers, and broad knowledge that substantial portions of value transacted depends on rewarding post-closing performance, contingent consideration remains a mystery to many industry M&A participants. Yet understanding earn-outs and the role they play in RIA deals is fundamental to understanding the value of these businesses, as well as how to represent oneself as a buyer or seller in a transaction.

This whitepaper is not offered as transaction advice or a legal primer on contingent consideration. The former is unique to individual needs in particular transactions, and the latter is beyond our expertise as financial advisors to the investment management industry. Instead, we offer this to explore the basic economics of contingent consideration and the role it plays in negotiating RIA transactions.

Download your copy of the whitepaper below.


WHITEPAPER

The Role of Earn-outs in Asset Management M&A

Download Whitepaper

Continue Reading

Outside Capital, Inside Ownership: Can an RIA Accomplish Both?
Outside Capital, Inside Ownership: Can an RIA Accomplish Both?
Outside capital can support an RIA’s growth and internal succession, but employee ownership requires careful attention to affordability, equity rights, governance, and liquidity. A successful partnership addresses both the current transaction and a practical path for future owners.
The Cost of Staying Independent
The Cost of Staying Independent

Sometimes Doing Nothing Is the Riskiest Choice

Remaining independent requires RIA owners to invest in future leaders, fund an ownership transition, and share authority. Delaying those commitments can increase risks for founders, employees, and clients, even when the business continues to perform well.
RIA Valuation Insights Blog Investment Management
Read Now about The Cost of Staying Independent
Skeletons in the Data Room: What Can Haunt an RIA Sale
Skeletons in the Data Room: What Can Haunt an RIA Sale
Client concentration, an aging client base, weak organic growth, founder dependence, and questionable earnings adjustments can complicate an RIA sale. Identifying and addressing these issues before due diligence helps owners protect transaction value and negotiate from a stronger position.
RIA Valuation Insights Blog Investment Management
Read Now about Skeletons in the Data Room: What Can Haunt an RIA Sale

Cart

Your cart is empty